By Nicholas Gruen
Where is politics headed after the ALP's near-death resources rent tax experience?
Bold change looks increasingly difficult - even if you're popular (ask our latest former PM), and even if you control the Senate (ask our previous former PM). Yet at least at the national level, complacency and inaction don't play too well either. We want to understand and believe in where our national government is taking us.
The three defining policies of Kevin Rudd's government were the fiscal stimulus, emissions trading and the resources rent tax. In each case the government's policies were adapted from independent advice embodying the broad consensus of experts. Each left the vast majority better off.
Yet their political fallout culminated in the removal of a prime minister. There's a common pattern to the way in which the headwinds mounted with each initiative, and there's a way of doing things better.
Even putting money in people's pockets and building new community facilities proved politically bruising. Commonsense says you respond to a crisis by throwing a party. Trouble is, in some economic downturns commonsense is wrong. And though the government did little more than implement Treasury advice (Treasury is the institutional embodiment of economic responsibility in the bureaucracy) a few experts could always be found to tell us how reckless it all was.
Our media's ''he said/he said'' style of reporting meant that only those with a keen interest would have known that the overwhelming opinion of mainstream economists supported the party to fend off recession. And how many Australians knew that more than three-quarters of the forecast budget deficit reflected economic conditions, not the stimulus?
Also, with media values supporting entertainment over enlightenment, the stuff-ups trumped the good news on page one - and of course, given the speed and magnitude of the stimulus, there were some royal stuff-ups. But the media didn't ask how representative they were or whether rushed projects might nevertheless be good value given that part of their cost would be met from taxes paid by those who'd otherwise be unemployed.
Then there was emissions trading. Malcolm Turnbull had already maxed out on opportunism in opposing the stimulus (no offence, Malcolm, an ALP opposition would have done the same). But as he argued, no pro-market mainstream party could keep its credibility and oppose a market-based response to climate change.
That was the only reasonable position. But, as Tony Abbott proceeded to demonstrate, an opposition's political interest lay elsewhere. As an American commentator wrote recently noting the parallels with Republican obstructionism towards Barack Obama: moderate members of the Liberal Party agreeing to a version of Rudd's signature policy initiative would make Rudd look good, like a dynamic leader capable of forging compromise and getting things done. If voters cared passionately about policy issues, of course, the Liberals would thereby be alienating them, but elections turn on swinging voters whose views are fuzzy.
Of course Rudd should have campaigned for emissions trading. But any doubts about the political efficacy of Abbott's plan to block it as a ''big new tax'', were dispelled by the politics of Rudd's resources rent tax.
Again the product of independent expert advice, it would have raised nearly $10 billion annually to fund tax cuts elsewhere and improve the budget bottom line. It would increase mining activity - encouraging more marginal investment - and was notionally levied not on voters but on owners (with a good smattering of billionaires and foreign companies).
But things still fell apart. Each time a billionaire said he'd hold up a project because the tax rendered it unviable, this fact was gravely reported as a setback for the government. Though the new tax was to fund company tax cuts and other tax favours to small business, most industry groups lay low. Some cross sectoral industry bodies opposed the new tax even though the package would have benefited most of its members.
And when business groups did support the tax - well, that's not really very compelling news is it? All this forced Julia Gillard to negotiate the mining industry's tax regime with - well, the mining industry. (Julia, I've got some time next Friday when we could get together and negotiate about how much tax I pay.)
Is there a better way? Australia's greatest period of economic reform and the longest tenure in government by a single party since Robert Menzies, coincided with the accord, an agreement formally between the Hawke government and the unions, but in fact involving business - and to some extent other peak groups.
Each six months or so the government would outline the critical economic priorities. The accord partners would then negotiate seeking consensus on how to address them. The process delivered lower real wages, micro-economic reform and the introduction of key business taxes.
The opposition made what trouble it could. But the accord co-opted the great and powerful lobby groups out of their lowest common denominator cherry picking and into supporting the consensus. Unions sold lower real wages to workers and business leaders sold capital gains and fringe benefits taxation to business. Even the opposition was shamed and bullied into supporting micro-economic reform. When they opposed capital gains tax and fringe benefits tax they looked carping, negative and irrelevant.
Of course, any modern analogue of the accord would be very different, but I'm hoping our new PM takes some inspiration from the consensus style of Australia's most successful Labor PM, the only really good prime minister in my lifetime. After Paul Keating, John Howard and Rudd, they might be ready to dial down the political heroics and embrace a government that builds social consensus behind its vision.
Nicholas Gruen is the chief executive of Lateral Economics.